Choose a stock from the Dow Jones Industrial Average. www.Dow30companiesor Dow30 Investopedia. Find its stock symbol and where its traded (Nasdaq, NYSE etc.) Google Value Lines website, enter the stock symbol, (upper right) choose the pdf format. Print outthe Value Line report (1 page.) This project shows how the financial statement data and ratios help forecast the value of your firm and your recommendation.

Use a highlighter pento show the past ten years and the estimate of the future two years of:

Total sales (omit if your co. is a bank) 7. ROE

EPS 8. Recent stock price

Dividends per share (actual in $) 9. P/E

Income tax rate 10. Net income (net profit)

Market Cap 11. Beta

Profit Margin 12. Dividend yield in %

On a separate page type the most current number for each of the 12 pieces of information above and explain why the data are important for making your recommendation about investing in that stock. For example,

1 I chose Johnson & Johnson. Its sales were $70,074,000,000. Thats $70.07 billion. Sales revenue is important because the managers base their forecasts for costs, AFN, accounts receivable etc. on expected sales. If sales are rising over the years, thats good. If profits went up but sales are going down, thats not good because it means that profits went up from cost cutting, and cost cutting is limited. For this company, total sales and sales per share have been rising over the last 10 year and are expected to rise in the next two years.

2 -EPS was $5.48/share. It is important because we can estimate the value of stock using the P/E ratio approach. Use the average P/E ratio of the industry and multiply that by the EPS to put a value on the stock. More importantly, is the P/E ratio for this company above or below the average and why? The average for P/E is about 16. Also, comparing EPS this year to previous years we can see that it was high for this stock and then its EPS declined. The P/E ratio for J & J is now 271 which is out of line with the market. The price of the stock has skyrocketed. Its probably too high compared to its earnings.

3 - Dividends per share are an important because analysts use it to estimate the value of stock based on the discounted dividend theory where: V= div₁/(1+k)ⁿ+g

It tells us the dollar amount of dividends that the company actually distributed. Its not always the same as dividends declared. Youll find it in the lower left hand box. It was $2.95. Some companies dont pay dividends. Then, the amount is zero. This is not the same as dividend yield, which is annual dividend/current price and is in percent form.

Follow my example for each of the 12 financial items for the company that you selected. (Some companies dont have all of the 12 items listed above. For example, a bank stock doesnt show sales revenue. So, if the performance measures dont apply, just highlight the ones that DO apply.) Then, write why you recommend this stock to buy hold or sell,

Buy means that investors who have extra money should buy his stock because the stock price is likely to go up. Hold means that if the investor already owns the stock they shouldnt buy more or sell any of it. Sell means that if the investor owns the stock they should sell it because its likely to go down in price.